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Sprint Signals End to T-Mobile Bidding

Written by: Andrew Bulkeley08/06/14 - 11:37 AM EDT

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BERLIN (The Deal) -- Sprint on Tuesday appointed Marcelo Claure as the company's new CEO and indicated it would end its run at T-Mobile USA, putting a question mark over the future of Deutsche Telekom AG's U.S. division.

Claure, 43, will take over Aug. 11 from Dan Hesse, who has led Sprint since 2007. Claure founded Brightstar Corp., which Sprint backer Softbank bought control of last year for $1.26 billion.

Softbank, the Japanese phone company, had hoped to link Sprint and T-Mobile to create a weighty competitor to AT&T and Verizon Communications, the two biggest cellular providers. But U.S. regulators are hesitant to see the market cut to three competitors from four and are especially wary of seeing T-Mobile, a cut-rate competitor, disappear. Regulators famously quashed AT&T's 2011 approach for T-Mobile for the same reason.

An end to Sprint's interest puts the focus on upstart French mobile provider Iliad, which just days ago confirmed its interest in its U.S. peer. Iliad wants to pay $15 billion to buy 56.6% of T-Mobile from Bonn's Deutsche Telekom, but analysts see little benefit.

Deutsche Telekom is expected to either reject the $33 per-share approach outright or possibly enter talks with the hopes of boosting Iliad's offer. Sprint had been expected to offer $40 per share.

Iliad may not be the only potential suitor. It is reportedly talking to other potential suitors about a joint bid.

Dish Network Corp. chairman Charlie Ergen has said he'd be interested in Bellevue, Wash.-based T-Mobile, though not in a bidding war. Dish made a run at Sprint itself last year but lost out to Softbank, showing it's clearly on the prowl as the line between telephones and entertainment blurs.

Though Deutsche Telekom for years had been trying to unload T-Mobile USA, it may now be in no hurry. It merged the company with regional rival MetroPCS Communications Inc. and then T-Mobile CEO John Legere began to turn the company around. His low-price offers and network improvements have begun to bear fruit: In the last quarter, the company added 908,00 new customers.